Recent research has established that contrary to Piaget's (1955) view of conversational egocentrism, young children possess some impressive communicative abilities. The purpose of the proposed research is to systematically investigate the kinds of assumptions speakers make about listeners' needs when they are engaged in narrative discourse. Two studies are proposed in which the narrative and nonverbal behavior of preschool (3-4 year olds) and first grade children will be examined for referential expressions, coherence, and cohesiveness. The literature on children's communication abilities represents at least two different traditions; referential research involving notions of egocentrism and roletaking and sociolinguistic research concerned with communicative competence. While various researchers have looked at young children's knowledge of various referring terms, these studies have not specifically manipulated conditions related to the establishment of mutual knowledge presuppositions. The proposed project is aimed at combining these approaches to explicitly assess the assumptions of mutual knowledge by studying both preschool and elementary school children using a naturalistic task (i.e., story narration) in a controlled setting. In the first study, factors related to physical co-presence and linguistic co-presence and community membership will be manipulated to see if the narratives of preschool children contain different types of referential information than those of first grade children. The second study will focus on a different aspect of community membership; familiarity with listener (i.e., mother vs. stranger). It will also examine how children respond to feedback (i.e., informational vs. conversational) to correct a listener's misunderstanding of different parts of the narrative. This research will contribute to our understanding of the nature of the communication process in children, and may enable us to teach children to use more effective strategies in conversational interactions.